Binance had 'at minimum ill-intent' in revoked FTX proposal: Sen. Ted Cruz

Quick Take

  • Sen. Ted Cruz said that the speed at which Binance offered to buy FTX and later backed out “suggests at a minimum ill intent.”
  • The senator spoke in support of bitcoin mining expansion during the Texas Blockchain Council on Friday.

Sen. Ted Cruz said that Binance showed "at minimum ill intent" regarding the offer it made and quickly took back to buy FTX last week.

Noting the speed of Binance's public offer to buy its troubled rival, then rapid withdrawal, Cruz told The Block, "All of that suggests at a minimum ill intent. And that’s worrisome. I think that is certainly worthy of considerable additional examination."  

In a brief interview following an appearance at the Texas Blockchain Summit in Austin, Cruz added that it "could make a lot of sense" for FTX's former CEO Sam Bankman-Fried to testify before the Senate Judiciary Committee, which he sits on. 

The House Financial Services Committee already announced a hearing on the FTX implosion and its implications for the broader digital asset industry earlier this week. The committee's top Republican told The Block this week that Binance’s role in FTX's demise is under congressional scrutiny.

But in Cruz's view that doesn't let FTX off the hook. 

"There's no doubt that at least initial reports suggest that an enormous amount of financial mismanagement and potentially fraud was occurring and investors have faced billions in losses," Cruz added.

As far as criminal charges, the senator said that it's still too early to tell.

"If there was deliberate and intentional fraud that injured people — and on the face of it, it certainly appears to be the case — then, of course, there should be consequences and liability for that."

Cruz spoke as the fallout from FTX's bankruptcy protection filing last week continues to unravel. Among the latest revelations, the Ontario Teachers' Pension plan announced the write-off of $95 million in FTX while Genesis Global Capital, the lending business of Genesis Trading, temporarily suspended redemptions and new loan originations as a result of its $175 million FTX exposure.

Mining in Texas

This was Cruz's second consecutive appearance at the mining conference. On stage he called Texas an "oasis" for bitcoin and crypto in general. 

In August, the senator toured Riot Blockchain’s Whinstone site in Texas, one of the largest in the world. He also said that he has an automatic weekly buy of bitcoin and currently owns just under two BTC, not having sold any during the down market.

Cruz argued that bitcoin miners are an asset to Texas’s much-maligned power grid, echoing industry assertions that mining sites can easily turn off at times of peak demand, freeing up that energy for residents, while at the same time supporting the expansion of renewable energy sources.

"As we see additional investment in bitcoin mining, that will further expand our capacity, which is a beneficial hedge against extreme weather events, either extreme heat or extreme cold weather, where energy consumption typically rises dramatically," he said.

Cautious approach to regulation

When it comes to regulation, Cruz argued that the government should "move slowly and carefully."

"I think there's a real risk of government regulators coming in with too heavy a hand and destroying a multitrillion-dollar industry," he said.

Also in attendance at the conference was former Democratic presidential candidate Andrew Yang, who addressed the potential impacts of FTX's collapse in regulation going forward.

"Because of FTX and the problems and the headlines and the real people that got hurt, there's going to be an appetite for regulation that in my mind might not hit the mark, because you want to be able to balance the very real concerns with the need to keep America the home of innovation," Yang said. "But this is categorically a very, very negative thing for human beings and for the regulatory environment."

With assistance from Stephanie Murray.


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